TD Ameritrade Holding Corp. (AMTD), E TRADE Financial Corporation (ETFC), Charles Schwab Corp (SCHW): Bet On These Brokerage Companies!

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Charles Schwab Corp (NYSE:SCHW) is the biggest company. It theoretically means that it is more difficult for Charles Schwab to show the same growth rates as E TRADE Financial Corporation (NASDAQ:ETFC), which is the smallest of the three, because it starts from a big base. There is little surprise that Charles Schwab has gained less this year than its peers. In addition, Charles Schwab Corp (NYSE:SCHW) provides banking services, as well as ETF offerings.

E*TRADE declared that it is closing its market-making business and took a $142 million goodwill impairment as a result of this action. In my opinion, this makes the company more focused. The market was pleased with the announcement and the stock rose 8% on the day of the report.

TD Ameritrade Holding Corp. (NYSE:AMTD) has set a bunch of internal records this quarter. The company posted record net revenue of $725 million, as well as record market fee-based revenue of $65 million. It also achieved record mobile trades and record derivatives trades. Moody’s has upgraded TD Ameritrade Holding Corp. (NYSE:AMTD) to “A3”. If the company can continue such a momentum, the shares would ultimately appreciate.

Bottom line

The biggest risk is the pace at which these stocks have appreciated. The big picture looks good for the business. Charles Schwab Corp (NYSE:SCHW) is less focused and most expensive, so I would not choose this one. TD Ameritrade Holding Corp. (NYSE:AMTD) and E TRADE Financial Corporation (NASDAQ:ETFC) look good. However, I would recommend waiting for a pullback, because it’s highly possible that the shares have gotten ahead of themselves.

Analysts’ mean target prices back this conclusion. They suggest 15% downside for Ameritrade, 10% downside for Charles Schwab, and 21% downside for E TRADE Financial Corporation (NASDAQ:ETFC). These targets are too much on the downside, but a significant pullback would make the brokers attractive.

The article Bet On These Brokerage Companies! originally appeared on and is written by Vladimir Zernov.

Vladimir Zernov has no position in any stocks mentioned. The Motley Fool recommends TD Ameritrade. The Motley Fool owns shares of TD Ameritrade. Vladimir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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